How Should You Adapt to 2022’s Changing Paper Landscape?
So, the paper supply landscape is slowly changing in a positive direction, but it’s not there yet. The question now is, well, what can you do? We’ve talked before about some changes you can make, but let’s really dive into how you can expect the landscape to continue to evolve.
In the last blog, we talked about paths to inventory improvement. While the decrease in demand will help, the reality is that manufacturers might not choose to reinvest in inventory. Since it would take around 350,000 tons for coated freesheet and 275,000 for uncoated freesheet to return to early 2020 levels of inventory, that would mean an investment of around $750 million. Manufacturers might want to invest that money somewhere else.
In other words, manufacturer inventory levels might never get back to normal. What that means for you is that new supply chain and service models might be where to shift your focus. If the environment simply remains light on inventory, new processes and capabilities will soon become necessary and standard.
One new reality is rationalization. SKU rationalization, grade rationalization—these are already becoming common, and they’re likely to have long-term effects. How you can navigate these simplifications is to be more flexible. Have backup options if your preferred option becomes unavailable. Identify potential consolidation points in your business and be able to scale up for the grades that are available. The more flexible you are, the more you’ll be able to adapt to what manufacturers and distributors decide to change.
Flexibility also entails how you interact with suppliers. For one, forecasting and planning will become more important. If allocations continue to be standard practice, they need to know what you’ll need and when you’ll need it. By communicating your needs to your channel partners early and often, you’ll be able to ensure you have the allocations that meet those needs.
This may also require prioritization. Some needs just might not be met. If you know which projects need to take priority, you can be prepared for any shifts or shortcomings that will naturally happen as manufacturers try to manage their own struggles.
On that same point, you can look for ways to help their team. Again, communication is the beginning of this. By seeking to understand the pain points your suppliers are facing, you might be able to identify opportunities that you can help them. Even if not, earning some political capital can never hurt.
With those strategies and mentalities, you can help your own frustrations as we get further into 2022. And while we’re not going to claim we can see the future, we do want to mention a few specific things you might want to anticipate as the year goes on.
No one wants to hear this, but there is a potential supply chain complication. We’ve talked about it before: a work stoppage. The US West Coast Longshoremen’s Labor Union’s contract expires this year, and that would certainly affect overseas shipping. While some shipping companies are planning to shift their imports to the East Coast, this would still create a trucking bottleneck in that part of the country, so any shutdown would cause some problems. Hopefully the labor dispute gets resolved, but be aware that import availability could have some issues later this year. On top of that, the COVID-19 protocols in China have the ports backed up with vessels waiting to be loaded and unloaded.
Another upcoming event is more predictable: maintenance. Summer is a frequent timeframe for manufacturers to do maintenance because of the availability of labor. Throughout June, July, and August, many paper mills plan to take downtime to work on equipment. This will have a greater effect on some grades of paper than others, which is all the more reason to find ways that you can be flexible and look for backup options in case availability drops while machines are undergoing upkeep.
Finally, let’s address the question that we all don’t want to ask. Even if things seem to be getting better, is there any chance they’ll get worse? Especially considering the conflict in Ukraine. The answer is never certain, but we can actually take some hope from how inventory has dwindled over the past couple years. Since those levels are so low, and since we do see demand declining, it’s unlikely that the overall situation gets worse in the short term. It may not get a lot better, but it’s not likely to get worse.
Not the most optimistic of notes, we know. But that’s why we wanted to give you some insights into what you can proactively do today and throughout the rest of 2022 to help meet your paper supply needs.
And if you want to connect with any of our print experts, don’t hesitate to reach out! We’d love to hear from you and see how we can help.